On March 2, 2023, the Zillow Q4 2022 Home Price Expectations Survey results were released. This survey is done on a quarterly basis.
An excerpt from the press release:
Economists and housing experts polled in the latest Zillow Home Price Expectation (ZHPE) survey expect home prices to fall 1.6% through Dec. 2023. Affordability challenges are still dragging down demand for homes – lower mortgage costs in January translated into sales that tracked pre-pandemic trends, but higher rates in February have since dampened buyers’ enthusiasm.
Starting next year, however, the panel foresees price growth picking back up, at an average clip of 3.5% per year through 2027 – the same rate that prices grew in the relatively stable period from 1987-1999, before the housing boom and bust cycle in the 2000s.
Various Q4 2022 Zillow Home Price Expectations Survey charts are available, including that seen below:
As one can see from the above chart, the average expectation is that the residential real estate market, as depicted by the U.S. Zillow Home Value Index, will (largely) continually climb.
The detail of the Q4 2022 Home Price Expectations Survey is interesting. Of the 117 survey respondents, only five (of the displayed responses) forecasts a cumulative price decrease through 2027.
The Median Cumulative Home Price Appreciation for years 2022-2027 is seen as 9.50%, 7.26%, 8.36%, 12.31%, 16.73%, and 21.98%, respectively.
For a variety of reasons, I continue to believe that these forecasts will prove far too optimistic in hindsight.
I have written extensively about the residential real estate situation. For a variety of reasons, it is exceedingly complex. While many people continue to have an optimistic view regarding future residential real estate prices, in my opinion such a view is unsupported on an “all things considered” basis. Residential real estate is an exceedingly large asset bubble. As such, from these price levels there exists potential for a price decline of outsized magnitude.
The Special Note summarizes my overall thoughts about our economic situation
SPX at 3955.60 as this post is written